ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + Third Quarter 2014 + College of Business and Technology

THE TRI-CITIES

Retail activity improved dramatically during the third quarter in all three cities, marking the best retail performance in over two years. On a year-to-year basis, Bristol sales increased 7.3% to $269 million, while Johnson City sales were up 5.1% to $483 million, and Kingsport sales rose 2.9% to $398 million. Adjusted for inflation, sales volume was up 5.4% in Bristol, 3.3% in Johnson City, and 1.1% in Kingsport. In comparison, retail activity increased 3.2% in the metro area, 4.6% in Tennessee and 2.8% in the United States.

 
  BRISTOL TN-VA JOHNSON CITY KINGSPORT 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 1119.0 9.8 1855.4 6.2 1407.7 0.7
 2008 1070.8 -4.3 1848.1 -0.4 1445.0 2.7
 2009 982.8 -8.2 1760.2 -4.8 1349.6 -6.6
 2010 972.8 -1.0 1791.8 1.8 1379.9 2.2
 2011 1014.5 4.3 1888.2 5.4 1456.0 5.5
 2012 1088.0 7.3 1910.3 1.2 1491.2 2.4
 2013 1002.3 -7.9 1915.5 0.3 1522.1 2.1
 10:1 232.1 0.4 414.7 1.3 317.9 -0.1
 10:2 228.6 -3.3 433.7 0.3  342.0 1.7
 10:3 248.7 -3.8 437.9 1.5 331.0 0.2
 10:4 263.5 2.6 505.5 3.9 388.9 6.7
 11:1 228.4 -1.6 426.8 2.9 326.5 2.7
 11:2 248.1  8.6 457.5 5.5 364.6 6.6
 11:3 260.8 4.9 471.3 7.6 369.1 11.5
 11:4 277.2 5.2 532.7 5.4 395.7 1.8
 12:1 259.9 13.8 453.6 6.3 354.3 8.5
 12:2 264.3 6.5 463.5 1.3 368.4 1.0
 12:3 265.7 1.9 464.1 -1.5 361.0 -2.2
 12:4 298.2 7.6 529.1 -0.7 407.5 3.0
 13:1 243.0 -6.5 452.7 -0.2 352.7 -0.5
 13:2 248.9 -5.8 472.8 2.0 375.0 1.8
 13:3 250.8 -5.6 459.1 -1.1 386.6 7.1
 13:4 259.7 -12.9 531.0 0.4 407.7 0.0
 14:1  239.8 -1.3 448.4 -0.9 363.3 3.0
 14:2 252.0 1.3 477.8 1.1 388.7 3.7
 14:3 269.1 7.3 482.7 5.1 398.0 2.9
 

THE METROPOLITAN AREAS

During the third quarter, retailers across the Tri-Cities Combined Statistical Area (CSA) enjoyed their best retail performance since the summer of 2011. Dollar sales rose by 5.0% to $1,750 million, while inflation adjusted sales volume increased 3.2%. This is a welcome change after two years of declining real sales. All seven metro counties participated in the turnaround as both dollar sales and sales volume saw significant gains. The best performance occurred in Hawkins County, followed by Scott, Unicoi, Carter, Sullivan, Washington (VA), and Washington (TN) counties.

TRI-CITIES CSA KNOXVILLE MSA CHATTANOOGA MSA

 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 6643.2 4.6 12265.8 3.8 7293.2 3.8
  2008 6567.9 -1.1 11528.9 -6.0 7078.6 -2.9
 2009 6166.5 -6.1 10543.6 -8.6 6566.6 -7.2
 2010 6346.7 2.9 10875.7 3.2 6947.7 5.8
 2011 6635.5 4.6 11827.7  8.8 7341.4 5.7
 2012 6762.3 1.9 12105.0 2.4 7629.1 3.9
 2013 6732.3 -0.4 12147.6 0.4 7606.1 -0.3
 10:1 1439.3 -0.4 2464.4 0.4 1625.7 5.6
 10:2  1604.9 3.9 2741.7 2.0 1756.2 6.3
 10:3 1599.7 2.1 2740.1 5.0 1718.9 7.6
 10:4 1702.8 5.7 2929.4 5.0 1846.9 3.9
 11:1 1507.8 4.8 2587.1 5.0 1670.3 2.7
 11:2 1685.9 5.0 2941.7 7.3 1842.3 4.9
 11:3 1684.6 5.3 3057.0 11.6 1878.7 9.3
 11:4 1757.2 3.2 3241.9 10.7 1950.1 5.6
 12:1 1641.7 8.9 2883.7 11.5 1818.6 8.9
 12:2 1692.0 0.4 3043.0 3.4 1939.6 5.3
 12:3 1670.4 -0.8 2992.7 -2.1 1883.7 0.3
 12:4 1758.1 0.1 3185.7 -1.7 1987.2 1.9
  13:1 1589.2 -3.2 2843.1 -1.4 1790.7 -1.5
 13:2 1716.6 1.5 3072.8 1.0 1945.4 0.3
 13:3 1666.3 -0.3 3019.5 0.9 1880.3 -0.2
 13:4 1760.2 0.1 3212.3  0.8 1989.7 0.1
 14:1 1598.9 0.6 2859.7 0.6 1793.2 0.1
 14:2 1742.4 1.5 3151.6 2.6 1995.1 2.6
 14:3 1750.2 5.0 3175.4 5.2 1969.2 4.7
 

Retail performance was stronger across all East Tennessee metro areas during the July to September period. Dollar sales rose 5.2% in Knoxville, 5.0% in the Tri-Cities, and 4.7% in Chattanooga. Adjusted for inflation, real sales increased 3.3% in Knoxville, 3.2% in the Tri-Cities, and 2.9% in Chattanooga. This marks the second quarter of real sales growth in East Tennessee.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 4,443,807 3.4 85,997 3.7
 2008 4,402,508 -0.9 83,612 -2.8
 2009 4,082,092 -7.3 77,155 -7.7
 2010 4,307,947 5.5 79,284 2.8
  2011 4,627,809 7.4 84,030 6.0
 2012 4,869,032 5.2 87,711 4.4
 2013 5,067,874 4.1 90,245 2.9
 10:1 991,137 5.3 18,168 -0.4
 10:2 1,086,431 5.9 20,115 3.5
 10:3 1,076,186 4.4 19,907 3.9
 10:4 1,154,193 6.5 21,093 3.8
 11:1 1,066,443 7.6 19,141 5.4
 11:2  1,169,075 7.6 21,210 5.4
 11:3 1,161,426 7.9 21,202 6.5
 11:4 1,230,865 6.6 22,477 6.6
 12:1 1,150,433 7.9 20,829 8.8
 12:2 1,223,324 4.6 22,189 4.6
 12:3 1,209,901 4.2 21,628 2.0
 12:4 1,285,374 4.4 23,065 2.6
 13:1 1,185,543 3.1 21,014 0.9
 13:2 1,277,921  4.5 22,907 3.2
 13:3 1,270,482 5.0 22,360 3.4
 13:4 1,333,928 3.8 23,965 3.9
 14:1 1,211,824 2.2 21,772 3.6
 14:2 1,340,545 4.9  23,646 3.2
 14:3 1,329,111 4.6 23,799 6.4
 

The national retail expansion continued into the summer months. Dollar sales in the United States increased for the twentieth quarter in a row – rising 4.6% to $1,329 billion. Inflation adjusted sales were higher by 2.8% over the same period in 2013. Retail volume has now increased for nineteen consecutive quarters at the national level. (During the Great Recession period, U.S. retail activity declined for seven quarters, after increasing for twenty consecutive quarters during the 2002 to 2007 business expansion.)

In Tennessee, dollar sales rose a strong 6.4% to $23.8 billion. Adjusted for inflation, sales activity in the state was 4.6% above 2013 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in seventeen of the last eighteen quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

The summer months saw a welcome turnaround in retail performance in the Tri-Cities area, as well as the best sales growth in the region and the state since early 2012. The national retail expansion continued unabated after nearly five years of real growth. Overall, this is the best retailing report in over two years.

In the Tri-Cities area, we are seeing a “doughnut” pattern in retail growth, where the outlying CSA counties have larger increases than the urban centers. (The three Tri-Cities accounted for 65.7% of CSA retail activity in the third quarter.) In Bristol, all of the retail growth occurred on the Bristol Tennessee side, thanks to the new Pinnacle shopping center.

The question is whether these good conditions can continue. At the national level, the answer is clearly a “yes.” Employment and production in the United States are expanding, and partial fourth quarter data show continued growth in retail sales volume. The outlook is for a very good holiday shopping season.

The big “if” is in the Tri-Cities area. The third quarter labor market report showed further declines in regional employment, continuing a two year downward trend in jobs, production, and income. From this perspective, the strong rebound in third quarter retailing was unexpected. To continue this regional improvement in sales performance, we will need to see significant levels of new job creation in the near future as well.

Technical Note. This report was prepared in December 2014. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which are the total sales in NAICS Sector 44, Sector 45, and Subsector 722. The national retail sales estimates are issued by the U.S. Census Bureau. The state, region, county, and city retail sales estimates are based on state sales tax collections and are benchmarked to the 2007 U.S. Census of Retail Trade and the 2002 U.S. Census of Retail Trade. The Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics is used to adjust the dollar value of retail sales into "real" or volume terms where the effects of price inflation are removed. The sales data are not adjusted for seasonality so comparisons should be made on a year-to-year basis. The dollar figures in the retail sales tables are in millions of dollars.

More Information. This report was prepared by Dr. F. Steb Hipple, Professor of Economics, and Research Associate, BBER. For more information, please contact Dr. Hipple c/o Department of Economics and Finance, Box 70686, East Tennessee State University, Johnson City, Tennessee 37614. Phone/Voicemail: 423-439-5304. Fax: 423-439-8583. E-Mail: Hipples@etsu.edu. Website: http://faculty.etsu.edu/hipples.